Apple

The world of everything Social has been the undisputed benefactor of all this “free money.” After all, wasn’t the term “Unicorn” applied and accepted with all its connotations as being a mythical creature that lived and breathed in the land of make-believe? It is incontrovertible that if not for the “free money” provided by QE, many, if not most of what currently falls under the social media umbrella would not only never had come into existence (let alone with Billion dollar price tags), but the perceived “hands off – unquestioning” attitude by Wall Street itself wound not be allowed. This in my opinion is an absolute wanton abandonment of business fundamentals and principles. However, it seems there is a change of mood (or realization the jig is truly up) on Wall Street.

The minimum wage is not what is commonly referred, as is being proven again as parts of the US experiment directly with this boundary. In New York, fast food workers have been given a $15 per hour minimum wage which is being celebrated by the same fast food workers who will bear the brunt of the experimentation. Some of them will be happy with the results, but there will be clear losers – the full wrath of redistribution is usually unseen which is why it persists.

China crashing, commodities plunging, emerging currencies imploding to levels last seen when LTCM blew up, Greece on the verge of deposit confiscations, the Apple Sachs Industrial average well in the red for the year, the US economy on the verge of an industrial recession, junk bonds bloodbathing, Donald Trump pulling ahead of Hillary... Meanwhile the president is in China's African slave colony of Ethiopia... prioritizing.

When we first exposed the shockingly dire lack of breadth in US equity markets, it was shrugged off by the mainstream media as yet another 'worry' in the wall to climb. It seems, however, that facts inevitably force their way to the surface and so both Bloomberg (more than 100% of this year’s increase in the S&P 500 Index is attributable to two sectors, health-care and retail. That’s the tightest clustering for an advancing year since at least 2000) and The Wall Street Journal (Amazon, Google, Apple, Facebook, Gilead and Walt Disney Co. account for more than all of the $199 billion in market-capitalization gains in the S&P 500) have been forced to expose the ugly truth about US equities... it is not a stock market - it's a market of 6 tail-chasing momentum stocks.

Over the last five-plus years in regard to today’s financial markets, the most revered memes that are recited in unison whether it’s in the form of a silent prayer or, it’s done in a near backwoods revival fashion from the televised financial shows “pulpit” in a “Can I get an …. !!!” stylized homily are: “It’s different this time!” followed with “The Fed’s got you’re back.” However, what they mean today may find those that put all their “faith” into such dogma finding that faith severely tested. For as of today July, 26, 2015 It truly is – different this time. And what else is different is: the Fed. may indeed have one’s back. Only problem this time is – that back may no longer be “yours.”

The purpose of this article is to outline, with facts, large global structural issues that everyone, bulls and bears alike, should be fully aware of. This article will focus on much larger structural issues that have been building for years and decades. And no this article is not so much about central banks, debt issues, Greece, China, deficits, etc. While all these are important as part of the overall picture, they are mere current symptoms of a much larger issue that is at the core of all that is already in play and will only deepen in our societies in the decades to come.

We are seeing a kind of flight forward by investors – promises of future returns that may or may not eventuate continue to be highly rewarded – no price seems too high. This is actually a fairly typical bubble phenomenon. It is impossible to say for how long it will continue and how far it will go, but it is possible to say how it will end: in tears, especially for Johnny-come-lately investors.

As the following chart shows, with $203 billion in investible dry powder which is probably the best way of calling AAPL's cash the Cupertino-based company is more than $30 billion larger than what is generally accepted to be the largest hedge fund in the world, Ray Dalio's Bridgewater, which however "only" managed some $171 billion as of May 2015.

We’ve spent the past few days in this space noting the recent thinning of the stock market advance. That is, despite the major averages continuing to hover near their 52-week highs, the internals are becoming uglier by the day. The main takeaway from this trend is that, should the relatively few areas of the market that are keeping it afloat begin to weaken, there will be precious little support left to prevent a significant correction. Indeed, we are beginning to see signs of deterioration now even among the stronger areas of the market.

A slow week devoid of virtually any macro news - last night the biggest weekly geopolitical event concluded as expected, when Greece voted to pass the bailout bill which "the government does not believe in" just so the ECB's ELA support for Greek depositors can continue - is slowly coming to a close, as is the busiest week of the second quarter earnings season which so far has been largely disappointing despite aggressive consensus estimate cuts, especially for some of the marquee names, and unlike Q1 when a quarterly drop in EPS was avoided in the last minute, this time we won't be so lucky, and the only question is on what side of -3.5% Y/Y change in EPS will the quarter end.

There has now been an unprecedented 31 consecutive months of CAT retail sales declines. This compares to "only" 19 during the near systemic collapse in 2008. In other words, if global demand for heavy industrial machinery, as opposed to unemployed millennials' demands for $0.99 Apple apps, is any indication of the true underlying economy, forget recession: the world is now in a second great depression which is getting worse by the month.

All eyes may be on Greece right now, but in reality, the economic malaise is widespread across the continent. It’s clear that Greece is not the problem. It’s a symptom of the problem. The real problem is that every one of these nations has violated the universal law of prosperity: produce more than you consume. This is the way it works in nature, and for individuals.